The race to re-imagine and spin off the most watched and possibly most beloved film in Hollywood history began in secrecy and with a codeword: Brick.

The Walt Disney Company did not own rights to the original 1939 The Wizard of Oz movie but moved stealthily to mount an audacious raid on the story and leave a rival studio flat-footed.

The result, Oz the Great and Powerful, has dominated the box office since its release last week, garnering over $80m domestically and $70m abroad, the third-biggest March opening ever, and prompting buzz about a sequel, a theme park ride and merchandising.

Warner Bros, which owns the rights to the MGM-made original, had mulled three big screen spin-offs but dozed while Disney tip-toed into production with director Sam Raimi and actor James Franco, conjuring up a new franchise.

"I don't know if they're laughing in the offices of Disney that they got away with it but I can certainly imagine that they're pretty pleased," said Matt Patches, movies editor at the Hollywood.com news site.

In the early stages Disney swore writers and producers to secrecy and used a codename lest their 3D project galvanise rival Oz productions. Hollywood's habit of bunching similar-themed movies together – for instance Robin Hood, Snow White, Truman Capote – can hurt revenue, especially for latecomers.

"To have a codename is very unusual. It was an indication of just how big a deal this was for Disney and how scared they were that someone would beat them out of the gate. I could feel the anxiety inside Disney," said Stephen Galloway, of The Hollywood Reporter. "It's a strange phenomenon where two or three people can have the same idea at the same time and it clicks."

Once Warner Bros learned of the $235m production, its lawyers banned Disney borrowing from the 1939 musical in which Judy Garland playing Dorothy skips down the yellow brick road with a tin man, a lion and a scarecrow in search of the wizard Oz – the most watched picture in history according to the Library of Congress.

Disney's version, drawn on Frank Baum's original books, is a prequel in which Franco plays a young Oz swept in a balloon into the magic realm 20 years earlier. There is no Dorothy or ruby slippers. "They treaded very carefully. They knew if they leaned too closely they could be in trouble with lawsuits so they tinkered with costumes, make-up and other details," said Patches.

The result has been the biggest domestic film debut of 2013, crushing the likes of Dead Man Down, a Colin Farrell thriller, and Jack the Giant Slayer, a big budget disaster for Warner Bros.

Disney, which did not respond to interview requests, was in dire need of a hit following its own big budget fiasco, John Carter, last year. It has talked up plans for an Oz theme park attraction and sequel starring Franco and Mila Kunis, Michelle Wiliams and Rachel Weisz as witches.

Just as Oz himself proves more charlatan than sorcerer, however, some question the reality of Disney's apparent magic.

The film has been panned by many critics. Some have accused Franco of a wooden performance, others have accused Raimi of producing a stilted story. Raimi had approached Robert Downey Jr and Johnny Depp for the title role before turning to Franco.

Before its release there were reports of studio-mandated reshoots to make Franco's character more sympathetic and to expand the dialogue of a talking monkey.

Audiences have been kinder than critics, giving the film a B+ CinemaScore, but Galloway said box office returns so far were not enough given the film's epic price tag.

"They haven't quite got away with it financially. This has not been a gigantic hit in relation to its cost." Foreign takings usually needed to outperform US box office for this type of blockbuster's profitability but so far Europeans and Asians had proved less keen than Americans, possibly because it was such an American story, said Galloway.

He suggested that talk of a sequel and theme park ride could be bluster. "Don't be taken in by the spin."

Warner Bros, though not quite swooping in on a broomstick, may have the last cackle. In partnership with Warner Bros, toymaker Mattel is expected to offer an extensive range of Oz-themed merchandise. "The way I see it they'll be able to piggyback on the success of Disney's movie," said Lutz Muller, chief executive of Klosters Trading Corps, a consumer products consultancy.

In contrast Disney was unable to sell products linked to the original movie and stuck with a toy partner, Jakks, which had less retail reach than Mattel. "I understand that Disney is not expecting much from its Jakks tie-in," said Muller.